Worldwide Tax Summaries 20142015

www.pwc.com/taxsummaries

Worldwide Tax SummariesCorporate Taxes 2014/15

Quick access to information about corporate tax systems in 155 countries worldwide.

Worldwide Tax SummariesCorporate Taxes 2014/15

All information in this book, unless otherwise stated, is up to date as of 1 June 2014.

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

2014 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

1www.pwc.com/taxsummaries Foreword

If you have any questions, or need more detailed advice on any aspect of tax, please get in touch with us. The PwC tax network has member firms throughout the world, and our specialist networks can provide both domestic and cross-border perspectives on todays critical tax challenges. A list of some of our key network and industry specialists is located at the back of this book.

I hope you will find these summaries useful, and please dont hesitate to contact any PwC specialist with comments or feedback on WWTS.

Rick StammVice Chairman, Global Tax LeaderPwC US+1 646 471 [email protected]

Foreword

The country summaries, written by our local PwC tax specialists, include recent changes in tax legislation as well as key information about income taxes, residency, income determination, deductions, group taxation, credits and incentives, withholding taxes, indirect taxes, and tax administration. All information in this book, unless otherwise stated, is up to date as of 1 June 2014.

Our online version of the summaries is available at www.pwc.com/taxsummaries. The WWTS website is updated regularly and provides quick access to the latest tax information and changes. Some of the enhanced features available online include Quick Charts to compare rates across jurisdictions, and reference materials on OECD, EU, and WTO member countries, among other valuable information. You may also access WWTS content through Tax Analysts at www.taxanalysts.com/wts.

Welcome to the latest edition of Worldwide Tax Summaries (WWTS), one of the most comprehensive tax guides available. This years edition provides detailed information on corporate tax rates and rules in 155 countries worldwide.

PwC Worldwide Tax Summaries2 Contents

Contents

Foreword ............................................... 1

Country chaptersAlbania .................................................. 7Algeria ................................................ 17Angola ................................................. 23Antigua and Barbuda ........................... 34Argentina ............................................ 44Armenia .............................................. 62Aruba .................................................. 75Australia .............................................. 91Austria ..............................................116Azerbaijan .........................................135Bahrain .............................................148Barbados ...........................................152Belarus ..............................................169Belgium .............................................192Bermuda ...........................................217Bolivia ...............................................222Bosnia and Herzegovina ....................232Botswana ..........................................253Brazil ................................................261Bulgaria ............................................284Cambodia ..........................................299Cameroon, Republic of ......................311Canada ..............................................321Cape Verde ........................................350Caribbean Netherlands ......................365Cayman Islands .................................370Chad .................................................373Chile .................................................384China, Peoples Republic of ................395Colombia ...........................................412Congo, Democratic Republic of the ....430Congo, Republic of ............................443Costa Rica .........................................463Croatia ..............................................473Curaao .............................................490Cyprus ...............................................504Czech Republic ..................................518Denmark ...........................................530Dominica, Commonwealth of ............546Dominican Republic ..........................553Ecuador .............................................562Egypt .................................................572El Salvador ........................................583

Equatorial Guinea .............................593Estonia ..............................................599Fiji .....................................................609Finland ..............................................623France ...............................................638Gabon ...............................................666Georgia .............................................679Germany ...........................................688Ghana ...............................................702Gibraltar ...........................................715Greece ...............................................724Greenland .........................................746Guatemala .........................................754Guernsey, Channel Islands ................764Guyana..............................................771Honduras ..........................................777Hong Kong ........................................787Hungary ............................................801Iceland ..............................................823India .................................................836Indonesia ..........................................862Iraq ...................................................880Ireland ..............................................885Isle of Man.........................................912Israel .................................................920Italy ...................................................941Ivory Coast (Cte dIvoire) .................970Jamaica .............................................980Japan ..............................................1004Jersey, Channel Islands....................1026Jordan .............................................1033Kazakhstan ......................................1042Kenya ..............................................1053Korea, Republic of ...........................1064Kuwait .............................................1085Kyrgyzstan .......................................1098Lao Peoples Democratic Republic ...1111Latvia ..............................................1119Lebanon ..........................................1136Libya ...............................................1150Liechtenstein ...................................1156Lithuania .........................................1167Luxembourg ....................................1184Macau .............................................1202Macedonia ......................................1212Madagascar .....................................1224

3www.pwc.com/taxsummaries Contents

Malawi ............................................1233Malaysia ..........................................1244Malta ...............................................1264Mauritius ........................................1277Mexico ............................................1292Moldova ..........................................1323Mongolia .........................................1341Montenegro ....................................1355Morocco ..........................................1365Mozambique ...................................1377Myanmar .........................................1388Namibia, Republic of .......................1398Netherlands .....................................1413New Zealand ...................................1432Nicaragua ........................................1450Nigeria ............................................1459Norway ...........................................1472Oman ..............................................1490Pakistan ..........................................1499Panama ...........................................1511Papua New Guinea ..........................1521Paraguay .........................................1537Peru ................................................1545Philippines ......................................1561Poland .............................................1576Portugal ..........................................1597Puerto Rico......................................1625Qatar ...............................................1642Romania ..........................................1651Russian Federation ..........................1678Rwanda ...........................................1699Saint Kitts and Nevis ........................1710Saint Lucia ......................................1721Saudi Arabia ....................................1730Senegal ...........................................1745Serbia ..............................................1754Singapore ........................................1765Sint Maarten ...................................1782Slovak Republic ...............................1793Slovenia ..........................................1807South Africa ....................................1820Spain ...............................................1838Sri Lanka .........................................1882Swaziland .......................................1896Sweden ...........................................1902Switzerland .....................................1912

Taiwan ............................................1930Tajikistan .........................................1941Tanzania .........................................1950Thailand ..........................................1961Timor-Leste .....................................1976Trinidad and Tobago .......................1986Tunisia ............................................1997Turkey .............................................2021Turkmenistan ..................................2042Uganda ...........................................2050Ukraine ...........................................2063United Arab Emirates ......................2085United Kingdom ..............................2090United States ...................................2115Uruguay ..........................................2136Uzbekistan, Republic of ...................2151Venezuela ........................................2165Vietnam ..........................................2186Zambia ............................................2201Zimbabwe .......................................2212

Global Tax ContactsOur global tax network ....................2224Tax Code of Conduct for the Global PwC Network .......................2226Human Resource Services ...............2229Indirect Taxes ..................................2233International Tax Services ...............2237Legal Services ..................................2242Mergers and Acquisitions .................2245Sustainability and Climate Change ..2250Tax Controversy and Dispute Resolution ..........................2252Tax Management and Accounting Services ........................2255Tax Policy and Administration .........2260Transfer Pricing ...............................2262Value Chain Transformation ............2265Global Tax Industry Leaders ............2267Worldwide Tax Summaries Editorial Team .................................2268

Country chapters

Albania 7www.pwc.com/taxsummaries

A

Albania

PwC contact

Loreta PeciPricewaterhouseCoopers Audit sh.p.k.Blvd. Deshmoret e Kombit, Twin Towers, Tower 1, 10th floor,Tirana, AlbaniaTel: +355 4 2242 254Email: [email protected]

Significant developments

As of 1 January 2014, the corporate income tax (CIT) ratechanged from 10% to 15%.

Taxes on corporate income

Albanian law applies the principle of worldwide taxation. Resident entities are taxed on all sources of income in and outside the territory of Albania, while non-resident entities are taxed on income generated only in the territory of Albania.

As of 1 January 2014, theCIT rate in Albania is 15% (previously 10%). CIT is assessed on the taxable profits calculated as taxable income less deductible expenses.

Local income taxesLocal taxes on income depend on a number of factors, such as type of activity, municipality where the business is located, and the annual turnover. Consequently, these taxes may vary from 20,000 Albanian lek (ALL) to ALL 143,000.

Corporate residence

Based on Albanian legislation, a legal entity is deemed to be resident in Albania if it has its head office or its place of effective management in Albania.

Permanent establishment (PE)PE in Albania means a fixed place of business where an entity carries out, wholly or partly, its business activities, including, but not limited to, an administration office, a branch, a factory, a workshop, a mine, and a construction or installation site.

The determination of a PE, where applicable, is based on the provisions of the double tax treaties (DTTs) that Albania has entered into with a number of countries. When dealing with DTT provisions, the Albanian tax authorities refer to the Organisation for Economic Co-operation and Development (OECD) commentaries.

Other taxes

Value-added tax (VAT)The standard VAT rate is 20%, and the standard VAT period is the calendar month.

Taxable transactions include goods and services supplied domestically as well as goods imported into Albania by a taxable person. The following transactions are also taxable:

Transactions performed for no consideration or for a consideration less than market value.

PwC Worldwide Tax SummariesAlbania8

Albania

Barter transactions. The private use of taxable goods by a taxable person (self-supply).

Determination of VAT payersTaxable persons are all physical persons and legal entities registered, or required to be registered, for VAT purposes.

The VAT registration threshold in Albania is annual turnover over ALL 5 million. Any person providing taxable supplies and whose annual turnover does not exceed ALL 5 million is not required to register, although voluntary registration is possible.

Taxpayers who, in the course of their business activity, provide services in the list of free professions (e.g. translators, lawyers, attorneys, pharmacists, dentists, economists), are required to register for VAT purposes in Albania, regardless of their annual turnover.

VAT obligations for non-resident entitiesForeign entities not registered with the Albanian tax authorities, carrying out business activities in Albania, are subject to 20% VAT in Albania when services rendered are related to immovable property located in Albania. This is applicable regardless of the value of the services supplied.

In this case, the foreign entity is obligated to register and pay VAT in Albania by nominating a VAT representative.

In cases where the foreign entity is in non-compliance with the above requirement, the tax liabilities and respective penalties derived from such non-compliance should be paid by the local beneficiary of the services.

Zero-rated goods and servicesThe following goods and services are subject to 0% VAT in Albania:

Export of goods. The supply of goods related to the international transport of goods or passengers. The supply of goods and services in relation to trading and industrial activities at sea. Services related to transport of goods and passengers. Services related to international telecommunications.

VAT-exempt goods and servicesThe following are considered VAT exempt:

The lease of land. The lease of buildings (only if the rental period is limited to two months), except

in cases where there is a contract between parties in which the supply is deemed as taxable.

Provision of services performed by Albanian subcontractors relevant to the processing of semi-finished goods intended for export.

Financial services. Postal services (only if the post does not import or carry out other postal services and

its annual turnover doesnt exceed ALL 5 million). Gambling, casino, and racetrack services. Written media and books. Advertising in electronic and written media. Interest payments on leasing transactions. Export of services. The sale of land and buildings, although the construction process itself is subject to VAT. The supplies made against a reduced payment by religious or philosophical

organisations for the purpose of spiritual welfare.


Albania

A The supplies of packages and materials used for the manufacture and confection of

drugs. Educational services. Hydrocarbon operations. Supply of free goods distributed for emergencies. The supply of drugs and health services provided by private or public institutions

are exempted from VAT, as of 1 January 2014. Previous to this change, the supply of drugs and health services was subject to a reduced VAT rate of 10%.

VAT calculationThe amount of VAT to be paid is calculated as the difference between the VAT applied to purchases (input VAT) and the VAT applied to sales (output VAT). If the input is higher than the output, then the difference is a VAT credit which can be carried forward to subsequent months. Otherwise, if the output VAT is higher than the input VAT, the difference represents VAT payable to the state.

Taxpayers who carry out taxable VAT activities, as well as VAT-exempt activities, can credit only that portion of their input VAT that corresponds to the VATable activities. To determine the amount of input VAT that can be claimed from the state, the taxpayer should estimate a VAT credit coefficient, being the rate of the taxable VAT activities over total activities.

Items of machinery and equipment imported by Albanian registered entities for their own use in the business activity (i.e. not for resale) are subject to a VAT deferral scheme under which the payment of VAT is postponed up to 12 months with a possibility of extension for an additional 12-month period.

VAT reimbursementTaxable entities have the right to claim VAT reimbursement if the period in which VAT credits are carried forward exceeds three consecutive months and the total amount of accumulated VAT credit is equal to or above ALL 400,000.

Following the request for VAT reimbursement, taxable entities have the right to obtain the reimbursement of VAT credit within 60 days after the request is submitted. For all taxable persons who are considered as exporters based on the criteria established by the Instruction of Council of Ministers, the deadline for tax authority approval, or not, of VAT reimbursement requests is within 30 days.

VAT returnsThe submission of VAT returns and sales and purchase books must be done electronically by all taxpayers.

Electronic submission deadlines fall on the dates below:

For VAT books, the deadline is the fifth day of the following month. For VAT returns and for the payment of the related VAT liability, the deadline is the

14th day of the following month.

As of January 2014, even the VAT representatives are subject to electronic submission of VAT books and returns.

Customs dutiesAlbania uses the Harmonized Code System for tariff classification.

The customs duty rates range from 0% to 15%, depending on the type of goods.


Albania

Import of machineries and equipment for use in the taxpayers business activity are generally subject to customs duties at the zero rate.

Customs duties on imports of vehicles are 0%.

Excise dutiesAny individual or legal entity (including their fiscal representatives) that either produces or imports into the territory of the Republic of Albania any commercial goods defined to be subject to excise tax, is subject to excise tax in Albania.

Albania levies excise tax on the following products:

Beer: ALL 3.6/litre to ALL 7.1/litre, depending on the annual quantity in hectolitre. Wine, champagne, fermented and sparkling beverage: ALL 52/litre. Other alcoholic drinks: ALL 100/litre to ALL 400/litre. Tobacco and its by-products: ALL 3,000/kg. Cigarettes containing tobacco: ALL 4,500/1,000 pieces. Liquid by-products of petroleum: ALL 20/litre to ALL 50/litre. Solid by-products of petroleum: ALL 5/kg to ALL 40/kg. Fireworks: ALL 200/kg. Pneumatic tyres: ALL 20/kg to ALL 40/kg for new purchased tyres and ALL 100/kg

for used tyres. Incandescent lamps: ALL 100/unit. Plastic, glass, and mixed packages: ALL 100/litre, ALL 10/litre, and ALL 20/litre

respectively.

Reimbursement of excise tax can be obtained on:

The excise tax paid on fuel used by entities engaged in the constitution of energy resources with installed capacities of not less than 5 MW for both its own needs and for sale.

The excise tax paid on fuel used in green houses as well as in production of industrial and agricultural products.

50% of the excise tax paid for plastic, glass, and mixed packaging used as input in the local recycling industries of these materials.

Real estate taxEntities that own real estate property in Albania are subject to real estate tax.

Real estate tax on buildingsReal estate tax on buildings is calculated based on the type of activity the business entity owning the building carries out.

Type of activityTax rate (Area1/Area2/

Area3) (ALL/sq m/year)I. Residential buildings:

Built before 1993 15/10/5 Built during and after 1993 30/12/6

II. Other buildings: Used for commercial and administrative services 400/300/200 Other buildings 100/60/40

III. Owned or in use buildings in approved territories, such as touristic villages, etc.

400/400/400


Albania

AReal estate tax on agricultural landReal estate tax on agricultural land is levied on each hectare and varies depending on the district where the agricultural land is located and on the land productivity categorisation.

Stamp duties and notary taxesThere are no stamp duties on the sale contract of land or other properties. There are, however, notary taxes that are, in nature, similar to stamp duties. The notary tax on sales contracts that relate to change in ownership of immovable properties is ALL 1,000. The notary tax on sales contracts that relate to change in ownership of movable properties is ALL 700.

Depending on the agreement reached between the seller and the buyer, the notary tax can be paid either by the seller, or by the buyer, or shared between both of them.

Registration taxesThe fee for the registration of a business entity is ALL 100.

Payroll-related taxesEntities shall withhold personal income tax from the gross salaries of their employees.

Employers shall pay social and health contributions (SHC) to the tax authorities at a rate of 15% and 1.7%, respectively. The social contributions are paid between the minimum and maximum gross salary for SHC purposes, which are ALL 19,026 and ALL 95,130, respectively. As of 1 January 2014, the health contributions are calculated on the total gross salary. Previously, health contributions were calculated on the minimum and maximum gross salary set for SHC purposes.

Branch income

Branch offices in Albania are subject to the same taxes as all other forms of legal entities.

Income determination

Inventory valuationInventory is valued at the end of each tax period using the methods stipulated in the Accounting Law, which should be applied systematically. The methods stipulated in the National Accounting Standards for the valuation of inventory at year-end are the average cost and first in first out (FIFO) methods.

Capital gainsCapital gains are taxed at the rate of 15%.

Dividend incomeDividends and other profit distributions received by a resident entity from another resident entity or from a non-resident entity are not subject to CIT for the resident beneficiary of such income. This applies despite the participation quote (in amounts or number of shares) of the entity distributing profits in the shareholder capital, voting rights, or its participation in initial capital of the beneficiary.

Interest incomeInterest income is taxed at the rate of 10%.


Albania

Foreign incomeAlbanian resident corporations are taxed on their worldwide income. If a DTT is in force, double taxation is avoided either through an exemption or by granting a tax credit up to the amount of the applicable Albanian CIT rate.

Albanian legislation does not contain any provisions under which income earned abroad may be tax deferred.

Deductions

Depreciation and amortisationAllowed tax depreciation and amortisation rates and methods for each category of fixed assets are shown below:

Asset category Method Rate (%)Buildings and machinery and other fixed structures installed in the building

Reducing-balance basis 5

Computers, software products, and information systems Reducing-balance basis 25Other assets Reducing-balance basis 20Intangible assets (including goodwill and start-up expenses) Straight-line basis 15

Land, fine art, antiques, and jewelleries are non-depreciable assets.

Depreciation and amortisation of fixed assets at amounts higher than those allowed for tax purposes is considered a non-deductible expense.

Interest expensesInterest paid in excess of the average 12-month credit interest rate applied in the banking system, as determined by the Bank of Albania, is a non-deductible expense. The amount of deductible interest expense may also be limited by thin capitalisation rules (see Thin capitalisation in the Group taxation section).

Bad debtBad debts are only deductible if the following conditions are met simultaneously:

An amount corresponding with the bad debt was included earlier in income. The bad debt is removed from the taxpayers accounting books. All possible legal action to recover the debt has been taken.

This applies to all entities except those operating in the financial sector.

Charitable contributionsThere are no provisions in Albania regarding the tax treatment of charitable contributions. In general, contributions are considered as non-deductible expenses for CIT purposes.

Fines and penaltiesFines and other tax-related sanctions are non-deductible expenses.

TaxesIncome taxes, VAT, and excise duties are non-deductible expenses.

Other significant itemsThe Albanian legislation also defines the following specific costs as non-deductible:


Albania

A Expenses not supported with fiscal invoices. Expenses paid in cash of amounts exceeding ALL 150,000. Benefits in kind and gifts. Wages, bonuses, and any other form of income deriving from an employment

relationship and paid to the employees in cash. Provisions and reserves (with some exemptions applicable to the financial sector). Expenses for technical services, consultancy, and management received from

foreign entities that are not registered for tax purposes in Albania and for which no withholding tax (WHT) has been paid by 31 December, at the latest.

Losses, damages, wastage incurred during production, transiting, or warehousing, exceeding the norms defined by laws and related instructions.

Impairment losses on fixed assets. Representation and reception expenses exceeding 0.3% of annual turnover. Sponsorship expenses exceeding 3% of profit before tax and sponsorships of press

and publications exceeding 5% of profit before tax.

The amounts allocated to special reserve accounts in banks and insurance companies are deductible, provided that they do not exceed the limits stated in the Bank of Albania regulations.

Employers contributions towards the life and health insurance of employees are deductible.

Banks can deduct only loan impairments (provisions) calculated under International Financial Reporting Standards (IFRS) for CIT purposes.

Net operating fiscal lossesFiscal losses may be carried forward up to three consecutive years. However, losses may not be carried forward if more than 50% of direct or indirect ownership of the share capital or voting rights of the company is transferred during the tax year.

Albanian legislation does not allow losses to be carried back.

Payments to foreign affiliatesPayments to foreign affiliates are subject to WHT unless tax relief is requested in accordance with the local legislation or any DTT in place. These payments are tax deductible if they are properly documented and incurred for business purposes only.

Payments to foreign affiliates made for the purpose of profit transfer might be subject to price revaluation by the tax authorities. Any transactions/payments made to foreign affiliates shall be performed on an arms-length basis.

Group taxation

There is no group taxation in Albania.

Transfer pricingTransfer pricing adjustments may be made if the conditions set in a transaction between related parties differ from those that would have been set if the parties were independent. In particular, the following are regarded as related parties:

A legal entity and any person who owns, directly or indirectly, at least 50% of the shares or voting rights in that entity.

Two or more legal entities if a third person owns, directly or indirectly, at least 50% of the shares or voting rights in each entity.


Albania

Thin capitalisationThe interest paid on outstanding loans and prepayments exceeding four times the amount of net assets are not deductible. This rule does not apply to banks and insurance companies.

Controlled foreign companies (CFCs)There is no CFC regime in Albania.

Tax credits and incentives

The following entities are exempt from CIT:

Legal entities that conduct religious, humanitarian, charitable, scientific, or educational activities.

Trade unions or chambers of commerce, industry, or agriculture. International organisations, agencies for technical cooperation, and their

representatives, the tax exemptions of which are established by specific agreements. Foundations or non-banking financial institutions established to support

development policies of the government through credit activities. Film studios and cinematographic productions (among other types of entity/activity)

that are licensed and funded by the National Cinematographic Centre.

Foreign tax creditAlbania does not apply foreign tax credits except in the case of DTTs (see Foreign income in the Income determination section).

Withholding taxes

The gross amount of interest, royalties, dividends, and shares of partnerships profits paid to non-resident companies is subject to a 10% WHT, unless a DTT provides for a lower rate.

The 10% WHT is levied on the gross amount of payments for technical, management, installation, assembly, or supervisory work, as well as payments to management and board members.

If a non-resident company does not create a PE in Albania, and a DTT exists between Albania and the home country of the non-resident company, the payment of WHT can be avoided.

Double tax treaties (DTTs)Albania has signed 39 DTTs, of which 35 are in force.

WHT rates envisaged by applicable DTTs are provided in the following table:

RecipientWHT (%)

Applicable fromDividends Interest RoyaltiesAustria 5/15 (6) 5 5 1/1/2009Belgium 5/15 (6) 5 5 1/1/2005Bosnia and Herzegovina 5/10 (6) 10 10 1/1/2009Bulgaria 5/15 (6) 10 10 1/1/2000China 10 10 10 1/1/2006Croatia 10 10 10 1/1/1999Czech Republic 5/15 (6) 5 10 1/1/1997Egypt 10 10 10 1/1/2006


Albania

ARecipient

WHT (%)Applicable fromDividends Interest Royalties

Estonia 5/10 (6) 5 5 -France 5/15 (6) 10 5 1/1/2006Germany 5/15 (6) 5 5 1/1/2012Greece 5 5 5 1/1/2001Hungary 5/10 N/A 5 1/1/1996India 10 10 10 -Ireland 5/10 (5) 7 7 1/1/2012Italy 10 5 5 1/1/2000Korea 5/10 10 10 1/1/2009Kosovo 10 10 10 1/1/2006Kuwait 0/5/10 (3) 10 10 1/1/2014Latvia 5/10 5/10 (2) 5 1/1/2009Luxembourg 5/10 5 5 -Macedonia 10 10 10 1/1/1999Malaysia 5/15 (6) 10 10 1/1/1995Malta 5/15 5 5 1/1/2001Moldova 5/10 5 10 1/1/2004Netherlands 0/5/15 (1) 5/10 (2) 10 1/1/2006Norway 5/15 10 10 1/1/2000Poland 5/10 10 5 1/1/1995Qatar 5 5 6 3/5/2012Romania 10/15 10 15 1/1/1995Russia 10 10 10 1/1/1998Serbia and Montenegro 5/15 10 10 1/1/2006Singapore 5 5 5 1/1/2012Slovenia 5/10 7 7 1/1/2010Spain 0/5/10 (4) 6 0 4/5/2011Sweden 5/15 5 5 1/1/2000Switzerland 5/15 5 5 1/1/2001Turkey 5/15 10 10 1/1/1997United Kingdom 5/15 6 10 -

Notes

1. If the recipient company directly or indirectly owns 50% of the capital of the paying company, 0% rate of the gross amount of the dividends applies. If the recipient company directly or indirectly owns 25% of the capital of the paying company, 5% rate of the gross amount of the dividends applies. A tax rate of 15% of the gross amount of the dividends applies in all other cases.

2. A tax rate of 5% of the gross amount of the interests applies in case of interests in a contracting state, which are paid to a loan granted by a bank or any other financial institution of the other contracting state, including investment banks and savings banks and insurance. A tax rate of 10% of the gross amount of the interests applies in all other cases.

3. If the recipient company or any other governmental body is resident of other contracting state, 0% rate of the gross amount of the dividend applies. If the recipient company (other than a partnership) directly or indirectly owns at least 10% of the capital of the paying company, 5% rate of the gross amount of the dividends applies. A tax rate of 10% of the gross amount of the dividends applies in all other cases.

4. If the recipient company (other than a partnership) directly or indirectly owns at least 75% of the capital of the paying company, 0% rate of the gross amount of the dividends applies. If the recipient company (other than a partnership) directly or indirectly owns at least 10% of the capital of the paying company, 5% rate of the gross amount of the dividends applies. A tax rate of 10% of the gross amount of the dividends applies in all other cases.

5. If the recipient company (other than a partnership) directly or indirectly owns at least 25% of the capital of the paying company, 5% rate of the gross amount of the dividends applies. A tax rate of 10% of the gross amount of the dividends applies in all other cases.

6. If the recipient company (other than a partnership) directly or indirectly owns at least 25% of the capital of the paying company, 5% rate of the gross amount of the dividends applies. A tax rate of 15% of the gross amount of the dividends applies in all other cases.


Albania

Tax administration

Taxable periodThe tax year is the calendar year.

Tax returnsThe final CIT return is due by 31 March of the year following the tax year.

Payment of taxPredetermined advance payments of CIT are due either by the 15th day of each month or by the end of each quarter.

According to the tax laws, CIT is paid during the year on a prepayment basis. The amount of monthly CIT prepayments is determined as follows:

Years of activities Period from January to April Period from May to DecemberYear 1 Taxpayers estimation Taxpayers estimationYear 2 Taxpayers estimation CIT of Year 1 divided by months of activity in Year 1Year 3 CIT of Year 1 divided by

months of activity in Year 1CIT of Year 2 less CIT prepaid during January to April in Year 2 divided by 8 months

Companies should decide on the use of their prior fiscal year after-tax profit within six months of the subsequent year and submit the decision to the tax authorities no later than 31 July. The decision should state the amount allocated as statutory reserve, the amount to be used for investments and/or for increase in share capital, and the amount to be distributed as dividends.

The final due date for the payment of the final CIT for a fiscal year is 31 March of the following year. Note that this payment is calculated as the total amount of CIT self-assessed from the taxpayer for that particular fiscal year less total CIT instalments paid related to that year.

Companies have the obligation to pay the tax on dividends to the tax authorities no later than 30 July of the year the financial results are approved, regardless of the fact of whether the dividend has been distributed or not to the shareholders.

Tax audit processGenerally, the Albanian tax system is based on self-assessment, which is under continuous audit by the tax authorities. Such audits include all types of taxes that the business is subject to. If any discrepancies result from the tax audit, the tax authorities issue an assessment notice, which the taxpayer might appeal within 30 calendar days.

Statute of limitationsWith regard to Albanias tax administration practices, the statute of limitations of a tax audit is five years. However, the statute of limitations can be extended by 30 calendar days in cases where:

a new assessment is made as a result of an appeal against a previous tax assessment a tax assessment is made as a result of a tax audit or investigation of the taxpayer by

the tax administration, or the taxpayer is subject to a penal case related to ones tax liabilities.

Topics of focus for tax authoritiesThe tax authorities main focus during a tax audit are areas related to transfer pricing, which is becoming an increasing area of focus; WHT; and aspects affecting CIT, such as expense deductibility.

Algeria 17www.pwc.com/taxsummaries

A

Algeria

PwC contact

Arnaud ChastelPricewaterhouseCoopers AlgrieLotissement Piette, N56, rue N06Paradou - Hydra 16 035, AlgerTel: +33 1 56 57 56 57Email: [email protected]


Recent significant corporate tax developments in Algeria include the following:

Temporary exemption from corporate tax for investing companies creating 100 jobs or more or which invest in strategic sectors.

Five year reduction of corporate for companies whose securities are introduced on the stock exchange.

Car manufacturers are obligated to create industrial or semi-industrial activity in Algeria within three years.

Limitation of the reinvestment obligation to tax advantages granted during the exploiting phase only.

Suppression of the obligation to submit foreign direct investments to the National Investment Council.


Corporate tax is due on activities performed in Algeria. It is applied according to the following two regimes:

The 24% withholding tax (WHT), which covers the corporate income tax (IBS), the tax on business activities (TAP), and the value-added tax (VAT) (i.e. three taxes in one), is required to be levied on services. The calculation base is the gross amount of the services invoiced.

The standard tax regime, which includes the following taxes: IBS at the rate of 25% computed on profit before tax. TAP at the rate of 2% computed on the invoiced turnover. VAT at the rate of 17% (except any specific exemption). Branch tax at the rate of 15% calculated on net profit after IBS.

Note that production activities are subject to IBS at the rate of 19% instead of 25%.

Nil corporate tax returns include the payment of a minimum corporate tax amounting to 5,000 Algerian dinars (DZD).

Corporate residence

Permanent establishment (PE)Algerian domestic tax law does not contain a clear and explicit definition of a permanent establishment or a fixed place of business. The tax law refers only to permanent place of business (installation professionnelle permanente), which, conceptually, actually suggests setting-up of a local commercial entity such as a branch or the like.

PwC Worldwide Tax SummariesAlgeria18

Algeria

In the absence of a double tax treaty (DTT), the basic principle that governs taxation of non-resident entities is that such entities are taxable in Algeria on their Algerian-source income whatever the way and the location where the work is carried out, provided only that the same are rendered or used in Algeria.

As a consequence, it will be present in Algeria through the execution of the related contract (services contract) to be performed in Algeria. From an Algerian point of view, it is not an investment and is by nature temporary. Note that it is possible to execute several contracts under the same establishment.

In the presence of a DTT, a foreign company will be taxed in Algeria if it has a PE only.

Other taxes

Value-added tax (VAT)VAT is imposed on the supply of goods or services in Algeria. It includes all economic activities conducted in Algeria. The zero rate is also applied to all exports. The standard VAT rate is 17%. The reduced rate is 7%, applying to various basic items.

Monthly VAT returns and payments are due by the 20th day of the following month.

Customs dutiesAlgerian imports are subject to payment of customs duties in the following increments: duty-free, 5%, 15%, or 30%.

Property taxesAn annual property tax is imposed on real estates in Algeria. Rates depend on the location of real estate.

Transfer taxesA transfer tax is applicable to land and buildings at a rate of 5% for registration fees, plus 1% as a tax for land publicity.

Stamp taxesStamp duty is imposed at varying rates on transactions, including the execution of various documents and deeds.

Payroll taxesThere is individual income tax withheld on salary and assimilated incomes (minus employee social security contributions). The income tax is withheld by applying the progressive scale rates (marginal rate 35%).

Social security contributionsThe employer must contribute 26% of the employee gross salary for social security contributions. The employee must pay 9% of gross salary.

Branch income

Branch tax is 15%. Note that since 2010, it is no longer possible to register a branch in Algeria. However, under certain conditions, a foreign company could operate in Algeria by registering its contract to local tax authorities. Under this scenario, a 15% tax rate applies on the distribution of profits.


Algeria

AIncome determination

Taxable income is determined by adding back non-deductible expenses and deducting other items.

Inventory valuationThe inventory valuation method for tax purposes must match the book method.

Capital gainsCapital gains are taxed as ordinary income. For certain assets, 35% relief is given where the assets have been held for up to three years, and 70% relief is given where the assets have been held longer.

Dividend incomeDividends to non-resident shareholders are subject to WHT at source of 15%. For resident shareholders, dividends are subject to WHT at source of 10%.

Interest incomeInterest income is taxed along with company income at 25%.

Rental incomeRental income is taxed along with company income at 25%.

Royalty incomeRoyalties are taxed at 24%. This rate could change in presence of a DTT.

Unrealised gains/lossesUnrealised gains are taxed as dividends.

Foreign currency exchange gains/lossesForeign currency exchange gains are taxed along with company income at 25%.

Deductions

Taxable income is determined by adding back non-deductible expenses and deducting other items.

Depreciation and amortisationThe depreciation rates are determined according to tax administration instructions, for example:

The depreciation rate for office items is 10% or 20%. The depreciation rate for industrial buildings is 5%. The depreciation rate for cars is 20% or 25%. The depreciation base for cars is limited

to DZD 1 million.

Start-up expensesStart-up expenses are deductible when paid.

Interest expensesInterest expenses are deductible when paid.

Bad debtBad debt is deductible when suing in justice.


Algeria

Charitable contributionsCharitable contributions are deductible up to a limit of DZD 1 million.

Pension expensesPension expenses are deductible when paid.

Payments to directorsPayments to directors are deductible.

Research and development (R&D) expensesR&D expenses are deductible when paid up to a limit of 10% of the taxable benefit and DZA 100million. The deductible amount has to be reinvested.

Bribes, kickbacks, and illegal paymentsBribes, kickbacks, and illegal payments are non-deductible.

Fines and penaltiesFines and penalties are non-deductible.

TaxesTaxes are non-deductible, except for TAP, registration duties, customs duties, and real estate taxes.

Net operating lossesCarryforward losses are permitted until the fourth fiscal year following that of loss. Carryback losses are not permitted.

Payments to foreign affiliatesPayments to foreign affiliates are deductible.

Group taxation

When an Algerian company holds 90% or more of the shares of one or more Algerian companies, the group may choose to be taxed as a single entity. Hence, the subsidiaries are treated as branches of the parent company, and corporate tax is payable only by the parent company. Under this system, the profits and losses of all controlled branches, subsidiaries, and partnerships in Algeria are consolidated. The consolidated group may also benefit from other tax advantages.

Transfer pricing regimeAn arms-length approach to transfer pricing applies. All entities registered with the tax department responsible for multinational companies (Direction des Grandes Enterprises) must submit documentation to support their transfer pricing practices within 30 days after a request is made by the Algerian tax administration.


Foreign tax creditAlgerian tax law does not provide for unilateral tax relief. A tax treaty, however, may provide for bilateral relief. This is a complex area in Algeria, and it is recommended that you contact us for specific advice.


Algeria

AWithholding taxes

The WHT levied on services is 24%, which covers IBS, TAP, and VAT (i.e. three taxes in one). The calculation base is the gross amount of the services invoiced.

The WHT levied on dividends is 15%. In the presence of a tax treaty, the WHT cannot exceed 5%.

The WHT levied on royalties is 24%. In the presence of a tax treaty, the WHT cannot exceed 5%, 10%, or 12%, depending on different cases.

Tax administration

Taxable periodThe taxable period is the calendar year.

Tax returnsForeign companies are required to file an annual tax return before 30 April together with a detailed statement of proceeds paid to third parties with respect to subcontracted services, hiring of personnel and equipment, leases, and technical assistance services.

Payment of taxCorporate tax is paid when the tax return is submitted.

Tax audit processAs a general rule, the tax administration informs the company that a tax audit has to be performed. The tax audit notification indicates the audited taxes (in all cases: IBS/TPA/VAT) and the concerned period. The company has some rights. Indeed, it can be assisted by an expert, and it can ask the tax administration about several issues subject to audit. The tax audit is concluded by sending a final tax reassessment notification.

Statute of limitationsThe statute of limitations is four years.

Topics of focus for tax authoritiesThe tax administration will focus on non-deductible expenses and the declaration of turnover.

Other issues

Exchange controlsA non-resident foreign company can open a non-resident account in local currency (i.e. dinars) called INR account based on the contract to be performed and on its registration to tax. An INR account can be used only for the object (purpose) for which it is opened.

A non-resident foreign company can also open a CEDAC (Compte Etranger en Dinars Algriens Convertible) account, which must be fed (credited) only from abroad in foreign currency.

The CEDAC account allows payment in dinars as well as in hard currency; furthermore, there will be no restriction or limitation for transferring back abroad in foreign currency any remaining sum in the CEDAC account or for drawing any foreign payment instrument. The exchange rate that will be used for converting dinar to foreign currency is the official rate at the date of the debit.


Algeria

Please note that a non-resident foreign company will not be able to transfer any balances from INR accounts to its CEDAC account or abroad without the express authorisation of the central bank, except in case of reimbursing temporary funding from the CEDAC account (such reimbursement must be for the exact same amount).

Choice of business entityForeign companies can run a business in Algeria through a legal entity (SPA) or PE. As for a legal entity, the foreign company cannot hold more than 49% of joint venture capital in Algeria.

Angola 23www.pwc.com/taxsummaries

A

Angola

PwC contact

Pedro CalixtoPricewaterhouseCoopersPresidente Business CenterLargo 4 de Fevereiro n. 3 , 1 andar - Sala 137.Luanda - Repblica de AngolaTel: +244 222 311 166Email: [email protected]


Under the ongoing tax reform, the Corporate Income Tax (CIT) Code changes are expected to be releasedvery soon. Some of the expected changes include the reduction of the CIT rate to 30% and the increase of the withholding tax (WHT)rate to 6.5%.


The standard CIT rate of 35% is levied on the taxable income of the following CIT payer groups (although, in practice, the last two are not applicable in actual Angolan economic reality):

Group A - Tax is levied on actual profits as shown in taxpayers accounting records (e.g. public and private companies, permanent establishments [PE] of foreign entities), adjusted accordingly with the provisions of the CIT code.

Group B - Tax is levied on taxpayers presumable profit (taxpayers not included in groups A or C).

Group C - Taxation is based on profits that taxpayers could normally earn/obtain (e.g. small family companies).

Resident entities are subject to CIT on worldwide income. Non-resident entities deemed to have a PE in Angola are subject to CIT on Angola-source income.

Special regimes, rules, and tax rates are provided for the oil and gas industry and the mining industry.

Exemptions from CIT are provided for:

Agricultural companies (for up to ten years). Cooperatives. Culture associations. Non-resident shipping operators (as long as reciprocity exists).

Investment income tax (IAC)Investment income tax (Imposto sobre a Aplicao de Capitais or IAC) is due on interest, dividends, royalties, and other income of a similar nature. In Angola, the IAC code divides such income into two taxable sections, as follows:

Section ASection A investment income includes the following:

Interest on credit facilities. Interest on loans. Income derived from deferred payments.

PwC Worldwide Tax SummariesAngola24

Angola

Tax is due at the moment that the interest or income is earned or at the moment when it is presumed to have been earned.

Note that a minimum annual interest rate of 6% is deemed on loan agreements and credit facilities, except if another rate is proven through a written contract.

Section BSection B investment income includes the following:

Dividends. Capital remunerations of members of cooperatives. Bond interest. Treasury bond interest. Interest on shareholders loans. Income derived from profits of non-public interest entities not collected until the end

of the year. Gambling income. Royalties.

For the purposes of this group of income, note that:

The concept of royalties includes the remuneration of any kind attributed to the use of or consent to use copyrighted literature; arts or science works, including movies and films or recordings for radio or television transmissions; patents; brands; drawings or models of a plan; formulas; or secret processes. The concept of royalties also applies to the use of or the consent to use industrial, commercial, or scientific equipment and information related to an experience acquired on the industrial, commercial, or scientific sector.

A minimum annual interest rate equal to the rate used by commercial banks on credit operations is deemed interest for shareholders loans.

Tax is due at the moment the effective attribution of income (dividends) is earned (interest) or paid (other income).

ExemptionsThe following income is exempt from IAC:

Interest on deferred payment of commercial transactions. Payment of dividends to Angolan CIT payers that hold a share higher than 25% for

more than one year. Interest from financial products approved by the Ministry of Finance that intend to

encourage savings, capped to capital invested of 500,000 Angola kwanza (AOA) for each person.

Interest from housing saving accounts intended to encourage savings for main permanent dwelling.

IAC rateThe IAC rate is 15%, except for the following income, for which the rate is 10%:

Dividends. Capital remuneration of members of cooperatives. Bond interest. Interest from treasury bonds (or 5% for interest of bonds with a maturity equal to or

greater than three years). Interest from shareholders loans. Royalties.


Angola

ATax is withheld by the payer on Section B income.

For Section A income, tax is assessed by the taxpayer through a tax return to be filed in January of the following year. When the payment of that income is made to a non-resident entity, Angolan law provides that the tax payment obligation shifts to the Angolan resident entity paying the income.

Any IAC paid is regarded as a tax deductible cost and, in addition, 65% of that tax paid is deducted up to the CIT liability. The only exception will be any investment income tax paid on dividends exempted.

Local income taxesThere are no local taxes on income in Angola.

Corporate residence

Business entities with a head office or effective management in Angola are considered resident entities and are taxed on worldwide income.

Permanent establishment (PE)Angola has not signed any double tax treaties; consequently, its domestic tax provisions apply with regards to PE.

The Angolan concept of tax PE is inspired in the United Nations (UN) Double Tax Treaty Model. A foreign entity is deemed to create a PE in Angola if it:

has a branch, an office, or place of management in Angola has a construction or installation site, or provides supervision over such site, only

when such site or activities exceed a period of 90 days in any given 12-month period, or

carries out services in Angola, including consulting, acting through employees or other personnel contracted for that end, when such services are provided for a period of at least 90 days in any given period of 12 months.

Other taxes

Consumption taxThere is no value-added tax (VAT) or sales tax in Angola. However, a consumption tax exists, which is similar to that of an excise duty. For goods imported or producedlocally, the rates vary from 2% to 30%. For services, the following rates apply:

Type of service Consumption tax rate (%)Lease of areas designated for collection and parking of motor vehicles

5

Leasing of machinery and other equipment, as well as work carried out in tangible assets

10

Leasing of areas used for conferences, colloquiums, seminars, exhibitions, showrooms, advertising, or other events

10

Consultancy services, namely legal, tax, financial, accounting, IT, engineering, architecture, economics, real estate, audit services, and legal services

5

Photographic services, film processing and imaging, IT services, and construction of web sites

5

Port, airport, and customs agent services 5


Angola

Type of service Consumption tax rate (%)Private security services 5Tourism and travel services promoted by travel agencies or equivalent tour operators

10

Canteen, cafeteria, dormitory, real estate, and condominium management services

5

Access to cultural, artistic, and sporting events 5Road, sea, train, and air transportation of cargo and containers, including the management of warehouses related to this transport, and passenger transportation, if provided in Angolan territory

5

For all the services mentioned above, the tax compliance obligations are the responsibility of the Angolan service providers, who can then add the tax to the amount charged to the acquirers. However, if the service providers are non-resident entities in Angola, the obligation will revert to the resident entities acquiring the services, if they are liable to pay CIT.

Service providers are exonerated from the obligation to pay consumption tax in the provision of services to oiland gas companies, but will only receive from the latter the amount due for the services, although the assessed consumption tax should be included in their invoices.The obligation of paying the tax is now with the oiland gas companies, pursuant to the provisions of theConsumption Tax Regulation.

The consumption tax amount supported by oil and gas companies will be deductible for petroleum income tax purposes.

Note that there are expected changes in the Consumption Tax Code that will reduce the scope of services liable to taxation and some compliance obligations regarding oil and gas companies.

Customs dutiesDuties are levied on imports at ad valorem rates varying from 2% to 30%. The range of taxation for both consumption tax and import duties varies according to the type of goods. The rates are set out in the tariff book.

Listed equipment may be imported temporarily, if a bank guarantee is provided.

A 0.1% statistical fee and a 1% stamp duty is also due on importation plus customs fees (from 1% to 3%).

A special exemption regime applies for the oil industry for some listed equipment.

Stamp taxStamp tax is payable on a wide variety of transactions and documents, at specific amounts or at a percentage based on value.

Important examples include:

Type of operations Stamp tax ratesOn receiptsStamp tax on receipts (in cash or in kind) is still applicable.

The rate of stamp tax for receipts is of 1%.


Angola

AType of operations Stamp tax ratesFinancial operationsStamp tax is applicable to financial operations, such as credit utilisation (and not only open credit accounts) and bond guarantees, interest and commission charged by financial institution, as well as foreign withdrawals, foreigner public debt bonds, foreign notes, and coins.

As a general rule, stamp tax is due for the entity that provides the credit and charge for the interest and commissions being then charged to the borrower or the interest/commissions debtor.

Credit facilities are subject to stamp tax on the utilisation of such funds, and, depending on the period, the rates of stamp tax will vary from 0.3% to 0.5%.

For regular credit, bank overdrafts, or credit where the period is not determined, stamp tax applies at a rate of 0.1%.

Housing credits are subject to stamp tax at a rate 0.1%.

Financial leasing on real estate and financial and operational leasing of tangible assets (maintenance and technical assistance included) are now subject to stamp tax at a rate of 0.3% and 0.4%, respectively.

Real estate operationsStamp tax is due on a paid acquisition of real estate by the acquirer.

Stamp tax is also due on letting and sub-letting, as well as on financial leasing of real estate, except when the leasing is for a permanent dwelling, which is exempt from stamp tax.

It is now clear in the law that tenants and sub-tenants are liable to stamp tax on letting and sub-letting.

Stamp tax applies on the acquisition of real estate at a rate of 0.3%.

Stamp tax applies on the registration of letting and sub-letting contracts at a rate of 0.4%.

Corporate operationsStamp tax is due on the initial or increase of share capital, whether made in cash or in kind.

On share capital and increase of share capital stamp tax applies at a rate of 0.1%.

InsuranceInsurance provided by national companies is subject to stamp tax, being the tax settled by the insurance company cost of insured person. The commissions generated in the insurance mediation business will also be subject to stamp tax.

Premiums and commission related to life insurance products, insurance against accidents at work, health insurance, and agricultural processing and livestock insurance are exempt from stamp tax.

The stamp tax applies on the amount of premium paid, and rates may vary from 0.1% to 0.3%, depending on the policys nature.

Commissions for mediation are subject to stamp tax at a rate of 0.4%.

Other operationsIn addition to the operations referred to above, the new table also refers the stamp tax applicable to written agreements, financial and operation leasing in tangible assets, customs operations, cheques, lending, civil deposits, gambling, licences, traders books, deeds, report, credit bonds, and transfer of business, among other acts.

The following other stamp taxes are applicable: Transfer of industrial or agricultural

business: Stamp tax applies at a rate of 0.2%.

Stamp tax of 1% on the import value.

The following exemptions apply:

Credit granted for a period of up to a maximum of five days, micro-credit, credit related to young accounts and old age accounts, and others of a similar nature that does not exceed the amount of AOA 17,600 each month.

Credit derived from credit card utilisation, when the reimbursement is made free of interest, according to the terms of the contract.


Angola

Credits related with exportation, when duly documented with the respective customs clearance.

Amounts due on the mortgage for the acquisition of a permanent dwelling. On interest and commissions charged on financial operations, such as young

accounts, old age accounts, and credits related to export under the terms mentioned above.

Interest from Treasury Bonds and Angolan Central Bank notes. Commissions charged for subscriptions, deposit and withdrawal from units of

investment funds, as well as the charges from pension funds. Commission charged on the opening and utilisation of saving accounts. Credit operations (including interest) for periods not exceeding one year, provided

these are obtained exclusively to cover treasury needs, when realised between shareholders and entities in which a direct capital shareholding not lower than 10% is held and which has remained in their ownership for a year (consecutively), or since the incorporation of the respective entity.

Loans bearing the characteristics of shareholder loans, including the respective interest, made by shareholders to the company in respect of which an initial period not shorter than one year is stated and no reimbursement is occurred before the end of that period.

Treasury management operations, carried out between companies within the same group.

Insurance premiums and commissions related to life insurance, work accidents, health, and agriculture and livestock insurance products.

Real estate income tax (IPU)IPU is levied on rental income earned by individuals or companies owning real estate assets.It is based on actual rental income when the assets are leased and on the assets registered value when the assets are not leased.

Leased assetsIPU is levied on rental income at a 25% rate.

The rental income is automatically reduced by 40% of its value, as it is presumed to finance all real estate related expenses.

Therefore, in practice, IPU applies at an effective 15% rate on rental income (i.e. 25% multiplied by 60% of rental income), with a minimum amount of 1% of the asset registered value.

A real estate asset is registered at the higher of (i) its valuation (based on criteria and tables to be published, which will take into account the area [square metres] and the characteristics of the property) or (ii) the value of its latest transfer.

Assets that are not leasedIPU is levied as follows for assets that are not leased:

Patrimonial value (AOA) IPU rate (%)Up to 5 million 0Over 5 million (on the excess) (1) 0.5

Notes

1. An asset registered at AOA 35 million will pay IPU only on AOA 30 million, resulting in an IPU payable of AOA 150,000.

ExemptionsThe only accepted exemptions of IPU are the following:


Angola

A State public institutions and associations that are granted with the public utility

statute. Property of Embassies or Consulates of foreign countries, provided there is

reciprocity. Religious temples.

PaymentRents paid by Angolan entities (individuals or companies) that carry out commercial activity must withhold the 15% IPU from rents paid. The IPU so withheld must be paid over to the tax authorities by the end of the following month.

For any other cases, owners of real estate assets must pay the IPU in January and July of the following year. At the request (by July each year) of the IPU taxpayer, if approved, the IPU is payable over four instalments in January, April, July, and October of the following year.

Filing requirementsIPU Model 1 must be filed by IPU taxpayers each January, disclosing the rents effectively received in the preceding year, distinguishing the leases agreed and received.

Real estate transfer tax (SISA)SISA is levied at a 2% rate for all acts that involve onerous permanent or temporary transmission of real estate. The value liable to tax is the higher of (i) the sale value or (ii) the registered value.

Exemptions of SISA are only applicable to the following entities:

State public institutions and associations that are granted with the public utility statute.

Property of Embassies or Consulates of foreign countries, provided there is reciprocity.

Religious temples. Real estate transferred for less than AOA 6,864,000 only when (i) at the first sale and

(ii) for residential purposes.

Branch income

Branch taxable income is taxed on the same basis as separate legal entities. Income remitted by a branch to the head office is not subject to IAC.


Inventory valuationInventory is valued at the historic acquisition cost. Any other method of valuation needs to be approved by the tax authorities.

Capital gainsCapital gains arising from the disposal of fixed assets are taxed as part of normal income.

Capital gains are determined by the difference between the sales proceeds and the acquisition value, deducted from tax deductible depreciation, adjusted by a devaluation coefficient.


Angola

Dividend incomeDividends received are exempt from CIT, provided that the share participation is owned for two consecutive years (or since the incorporation of the entity where the participation is held) and the share participation is not less than 25%.

Dividends from Angolan participations owned by insurance companies to fund their technical reserves are also exempt from CIT.

Interest incomeInterest from public bonds is exempt from CIT.

Rental incomeRental income, as being liable to real estate income tax, is not liable to CIT. See the Other taxes section for more information.

Royalty incomeRoyalty income is taxed as normal income. Any IAC paid is regarded as a tax deductible cost and, in addition, 65% of that tax paid is deducted, up to the CIT liability.

Foreign incomeAn Angolan resident CIT payer is taxed on all its foreign income. Any income tax proved to be paid outside the country for activity carried on outside the country will be credited against the CIT liability.

No tax deferral provisions exist in Angola.

Deductions

DepreciationDepreciation should be computed using the straight-line method; any other method must be approved by the tax authorities.

The tax depreciation rates should respect the limits imposed by Government Ruling 755/72, and, in absence of this Ruling, the tax authorities interpretation, as follows:

Type of asset Rate (%)Office building 2Industrial building 4Computers 33.33Office equipment 10Furniture 10Software 33.33Light passenger vehicles 33.33Start-up expenses 33.33

Depreciation not accounted for at cost is not permitted as a deduction in the following years.

Further, depreciation of land and goodwill is not accepted for tax purposes.

30% of the increase on depreciation resulting from a legal revaluation of fixed assets is not accepted for tax purposes, as well as the total increase in depreciation resulting from free revaluation of the fixed assets.


Angola

AInterest expensesInterest costs are accepted as deductible for tax purposes.

Bad debtWrite-off of debts is considered as deductible only if the write-off resulted from a bankruptcy court process.

ProvisionsThe only provisions accepted as deductible for tax purposes are:

Doubtful debts within an annual limit of 2% of the clients current total account value and provided that a 6% accumulated provision limit is not exceeded.

Inventory depreciation within limits that vary from 1% and 8% (annual and accumulated), depending on the nature of the companys activity.

Those respecting the limits and rules imposed by the Insurance Supervision Institute for insurance companies, as well as the Central Bank for FinancialInstitutions.

Provisions for possible losses resulting from a court process.

Charitable contributionsDonations are accepted as deductible, up to a limit of 2% of the taxable income, if the donations are granted to Angolan education, science, charity, and cultural institutes. If granted to Angolan government, central and local administration bodies, the donations are fully deductible.

Fines and penaltiesFines and penalties are not accepted for tax purposes.

TaxesAll taxes are deductible for CIT purposes, except the CIT itself or taxes supported on behalf of others (e.g. employment income tax supported on behalf of the employees).

Net operating lossesTax losses are deductible from the taxable income of the following three years. Carryback of losses is not allowed.

Payments to foreign affiliatesPayments to foreign affiliates are accepted for tax purposes, although the arms-length principle should be respected.

Group taxation

Thereis a special rule for group taxation in Angola that, in general terms, allowsfor single taxation of the sum of the taxable income of all companies within the group. For this regime to be applied, it is mandatory that the holding company is an Angolan one.

Transfer pricingRecently, legislation has introduced a new special regime for so called major taxpayers, being the ones identified in alist published by the Ministry of Finance. This regulation provides a special regime of taxation, additional specific reporting, and administrative obligations, namely the obligation of audited accounts and to prepare special transfer pricing documentation (e.g. the same will have to, under certain requisites, organise their transfer pricing documentation and submit it to the tax authorities). This will be applicable to those major taxpayers that have registered annual profits higher than 70 million United States dollars (USD).


Angola

Thin capitalisationThere are no thin capitalisation rules in Angola.


Foreign tax creditAny income tax proved to be paid outside the country for activity carried out outside the country will be credited against the CIT liability.

Investment incentivesProfits retained and then reinvested by the company in new installations or equipment during the following three financial years may be deductible from taxable income during the following three years after the investment is finalised. Note that this benefit is not yet regulated.

Special regulations also provide tax and customs incentives for investment projects in strategic economic development areas and sectors. One such incentive can provide up to 15 years of CIT exemption.

Withholding taxes

WHT is applicable on payments for services provided to Angolan entities. For Angolan taxpayers, this is regarded as an advance payment of the CIT due at the year-end. For non-resident companies, this is a final tax.

The payments subject to this WHT are those related to:

Construction, improvement, repair, or conservation of immovable property withheld at a rate of 3.5% on the gross payments (CIT rate of 35% applicable on a 10% deemed margin).

Other services, namely technical assistance and management fees, withheld at a rate of 5.25% on the gross payments (CIT rate of 35% applicable on a 15% deemed margin).

Due to the IAC, Angola does not have a separate WHT for dividends, interest, and royalties (see the Taxes on corporate income section for more information).

Tax administration

Taxable periodThe tax year follows the calendar year.

Tax returnsThe annual corporate tax return must be submitted by the last business day of May of the year following the year to which the income relates.

Payment of taxTax is paid in four instalments. The first three correspond to advance payments based on the expected tax to be paid or, if unknown at that date, 75% of the taxable income computed on the previous year multiplied by the tax rate (35%). The instalments are paid in January, February, and March, and the final instalment is paid with the submission of the annual tax return on the last business day of May.


Angola

ATax audit processThe tax authorities carry out audits to the monthly and annual tax returns to identify any possible internal inconsistencies.

Taxpayers may disagree with any tax decision they are notified of and file an appeal to their respective Taxpayers Chief within 15 days upon receiving the tax notification.

Based on an unsatisfactory decision of the Taxpayers Chief, the taxpayer may also file a hierarchic appeal addressed to the National Director of Taxes (DNI) within 15 days upon receiving the tax notification.

The judicial stage, in which appeals against the final decisions of the DNI are handled by the courts, has a very low degree of success as there are still no specialised tax courts and the courts will ask for technical support from the same public entities that carry out the tax audits.

Statute of limitationsThe statute of limitations in Angola is five years.

Topics of focus for tax authoritiesThe main areas of focus of the tax authorities relate to compliance in respect of payment in due time of any WHTs due, as well as the 1% stamp tax on receivables. Further, they usually try to investigate the deductibility of costs according to their nature.

Legal regime on invoices and equivalent documentationTaxpayers (individuals or corporate entities whose residency, registered office, effective management, orPE is in Angola) should ensure that their software provide for the invoices to be duly dated, sequentially numbered, and include certain mandatory information, amongst which we highlight, for its novelty in regards to the previous regime, the obligation for the invoices and equivalent documents to be written in Portuguese and expressly mention that they were computer processed.

Taxpayerswhoissue invoices or equivalent documents that do not follow this regime will be subject to payment of fines and penalties (corresponding to 20% of the amount of the non-issued invoice, which may increase up to 40% in the event of a repeated fault), and, in the hands of the acquirer, the respective cost will not be accepted as deductible for tax purposes.

PwC Worldwide Tax SummariesAntigua and Barbuda34

Antigua and Barbuda

PwC contact

Louisa Lewis-WardPricewaterhouseCoopers SRLThe Financial Services CentreBishops Court HillPO Box 111St. Michael, BB14004Barbados, West IndiesTel: +1 246 626 6756Email: [email protected]


On 1 May 2013, specific reforms to the Social Security Act came into effect to ensure the viability and sustainability of the social security scheme. These include an increase in the overall contribution rate by 2% and an increase in the base on which the tax is assessed. This increase is shared equally between employer and employee. The employer will now contribute 6% to the scheme on behalf of the employee while each employee will contribute 4%. In addition, the ceiling on insurable income moved from 4,500 East Caribbean dollars (XCD) to XCD 6,500 per month.

There have not been any significant corporate tax developments in the first half of 2014.


Companies incorporated in Antigua and Barbuda pay corporate income tax (CIT) on their worldwide income, with relief available under existing double taxation agreements (DTAs). Non-resident companies deriving income from Antigua and Barbuda are liable for CIT and should be registered if they have a physical presence in Antigua and Barbuda.

Antigua and Barbuda imposes a flat CIT rate of 25%.

Taxable income or chargeable income is ascertained by deducting from income all expenses that are wholly and exclusively incurred during the year for the production of that income. Chargeable income is normally arrived at by adjusting the net profit per the financial statements for non-taxable income, non-deductible expenses, and prior period losses of up to 50% of chargeable income.

Where a person resident in Antigua and Barbuda makes to another person not resident in Antigua and Barbuda a payment other than interest, that person shall deduct or withhold 25% of that amount.

Reduced CIT rate for certain financial institutionsFinancial institutions licensed under the Banking Act that maintain, throughout the tax year, residential mortgage rates at or below 7% are subject to a reduced CIT rate of 22.5%.

Corporate residence

A corporation is deemed to be a resident if it is incorporated in Antigua, if it is registered as an external company doing business in Antigua, or if the central management and control of its business are exercised in Antigua.

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Antigua and Barbuda

Permanent establishment (PE)The concept of a PE is described within a number of Antigua and Barbudas DTAs. A PE is, in general, created in line with the Organisation for Economic Co-operation and Development (OECD) Model Convention.

A PE is not defined in the Income Tax Act; however, any company that would meet the general definition of a PE must be registered.

Other taxes

Antigua and Barbuda Sales Tax (ABST)ABST is an indirect tax and is levied at the rate of 15% on the value of a wide range of goods and services imported or supplied in Antigua and Barbuda by ABST-registered persons. The rate applied in respect of hotel accommodation is 12.5%.

A number of services, including financial services, local transport, the sale of residential land, education, long-term accommodation (greater than 45 days), and medical and veterinary services are exempt. Intergroup transactions are taxable.

Persons operating under the ABST regime must be registered for ABST. The threshold for ABST registration is XCD 300,000 in taxable activity per 12-month period. A period in the ABST Act represents one month.

Certain supplies are zero-rated, including exports, basic food items, water, electricity for residential use, sale of new residential property, construction of new residential premises, and fuel.

Registered persons may deduct input tax from their output tax in calculating the tax payable for that ABST accounting period. Where input tax exceeds output tax, the registrant will be entitled to a refund of ABST.

Customs dutiesAll imports are subject to customs duties, ABST, Antigua and Barbuda Revenue Recovery Charge, and an environmental levy. In all instances, certain exemptions will apply.

Customs duty is levied on a wide range of imported goods at rates from 0% to 70% as specified in the Custom Duties Act. Customs duty is levied on goods based on the cost, insurance, and freight (CIF) values and rates determined by the Caribbean Community (CARICOM) Common External Tariff.

Antigua and Barbuda Revenue Recovery ChargeThe Antigua and Barbuda Revenue Recovery Charge is applied at a flat rate of 10% on the CIF value on all goods imported into or produced in Antigua and Barbuda. Exemptions will include entities with which the government has International Assistance Agreements, certain government entities, and most supplies or imports of fuel.

Excise taxesThere are no excise taxes in Antigua and Barbuda.

Property taxesProperty tax is levied annually at graduated rates on the basis of the market value of real property (as assessed by the Property Valuation Department) and its use (residential or commercial).

Property tax rates are as follows:


Antigua and Barbuda

Agricultural land: 0.10%. Residential land: 0.20%. Residential building: 0.30%. Buildings classified as other property: 0.50%. Land classified as other property: 0.40%.

Allowances and tax rebates are available as follows:

Dwelling house allowance of XCD 150,000 from the taxable value. 5% rebate for payment of tax on or before the due date. New dwelling house will be exempt from tax for the first two years of being habitable. Between 25% and 100% tax rebate available for special development property and

property for public use; 25% for hotels.

Non-citizens undeveloped land taxUndeveloped land tax is levied on the basis of the value of land owned by non-citizens that has not been developed. The tax takes effect from the date of declaration by the government.

Rates of tax are as follows:

First year of ownership: 10%. Second year of ownership: 15%. Third and subsequent years of ownership: 20%.

The charge is cumulative and based on market value as assessed.

Stamp taxStamp tax applies to a very wide range of transactions (e.g. bill of sale, leases, mortgages, contract, bill of lading).Stamp tax on transfer of real property and shares are specifically covered below.

Transfer of real propertyStamp tax is imposed on both the buyer and the seller and is levied on the consideration for the sale or the value of property (as assessed by the Chief Valuation Officer), whichever is higher. The stamp tax for vendors is 7.5%, and the stamp tax for purchasers is 2.5%.

Non-citizens vendors are required to pay a land value appreciation tax at the rate of 5%, which is assessed on the difference between the value of property when purchased, plus improvements, and the value of property at the time of sale.

Non-citizens purchasers are also required to pay 5% of the value of property with reference to a non-citizens licence required to hold property in Antigua and Barbuda.

Transfer of sharesStamp tax is imposed on both the buyer and the seller and is levied on the market value of the shares or book value of the shares, whichever is higher. The stamp tax for vendors is 5%, and the stamp tax for purchasers is 2.5%.

A non-citizen must obtain a licence (at a cost of XCD 400) to hold shares or be a director in a company that owns land or has a lease on land in excess of five acres for a period greater than five years.

Environmental levyEnvironmental levy is calculated based on dollar value rates from XCD 0.25 to XCD 2,000 and is used to finance the cost of protecting and preserving the environment.

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ALife insurance premium taxA premium tax of 3% is levied on the premium income (net of agents commission) of all life insurance companies, whether resident or non-resident.

General insurance premium taxA premium tax of 3% is levied on the premium income, excluding motor business (net of agents commission), of all general insurance companies, whether resident or non-resident.

Statutory payroll deductions

Social security contributionsThe employer portion of social security contributions is 6% of chargeable income of up to XCD 6,500 per month as of 1 May 2013 (previously 5% of chargeable income of up to XCD 4,500 per month).

Medical benefitsThe employer portion of medical benefits payments is 3.5% of salary and wages of an employee who is between 16 and 60 years of age.

Branch income

Branch income is taxed on the same basis and at the same rate as that of corporations. A resident branch of a foreign company shall be regarded as a separate company and shall be taxed on the same basis as that of a locally registered corporation.

Recharges of expenses from head office to the branch are subject to withholding tax (WHT) at a rate of 25%. The recharges have to be justifiable, consistent, and cannot just be based on a percentage allocation.


Inventory valuationInventories are generally stated at the lower of cost or net realisable value. First in first out (FIFO) and average cost methods of valuation are generally used for book and tax purposes. However, the Commissioner of Inland Revenue will normally accept a method of valuation that conforms to standard accounting practice in the trade concerned. Last in first out (LIFO) is not permitted for tax or book purposes.

Capital gainsCapital gains are not subject to tax in Antigua and Barbuda.

Dividend incomeDividends received by a company resident in Antigua from another company resident in Antigua are taxed at the CIT rate of 25%. Credit is given to the recipient for the tax already paid on the dividend in computing the tax liability.

Stock dividendsAn Antiguan corporation may distribute a tax-free stock dividend proportionately to all shareholders.

Interest incomeInterest income received by a company registered in Antigua is taxed at the CIT rate of 25%. Interest earned on local and other CARICOM government securities are normally exempt from the payment of CIT.


Antigua and Barbuda

Foreign incomeAn Antiguan corporation is taxed on foreign branch income as earned and on foreign dividends as received. Double taxation is avoided by means of foreign tax credits where active tax treaties exist and through deduction of foreign income taxes in other cases (the United Kingdom [UK] and CARICOM). There is also relief from British Commonwealth taxes. See Foreign tax credit in the Tax credits andincentives section for more information.

Deductions

DepreciationDepreciation allowed for tax purposes is computed by the diminishing-balance method at prescribed rates (see table below). Initial allowances are granted on industrial buildings and on capital expenditures incurred on plant and machinery by a person carr

Documents

Worldwide Tax Summaries 20142015